Singapore's designs on utility a test for ACCC

Singapore Power's $5.1 billion plan to buy TXU Australia will throw down a challenge for the Australian Competition and Consumer Commission if the Victorian Government-owned utility seeks to go ahead with the deal in its current form.

TXU has already accepted the SP offer but the bid is conditional on approval by the ACCC. SP owns the SPI PowerNet business, Victoria's monopoly owner of power transmission assets.

TXU has about one third of Victoria's gas and electricity distribution networks and 1.1 million gas and electricity retail customers, most in Victoria. It also has the underground gas storage in western Victoria, 33 per cent of the SEAGas pipeline between Victoria and South Australia and the 1280 megawatt Torrens Island generator near Adelaide.

If SP is allowed to buy all of TXU it would mean that for the first time since privatisation in Victoria and SA, a single company would own the whole electricity delivery process, from generation through transmission, distribution and retail. It would also have significant investment in gas transmission, distribution and retail across two states.

The ACCC has traditionally believed that companies owning generation should not own transmission as it gives them the theoretical capacity to reduce power delivery by cutting the capacity of transmission lines to boost prices to generators.

The ACCC tried to block Australian Gas Light's purchase of Loy Yang A in a consortium in which it had only 35 per cent, fearing the deal could lessen competition.

ACCC will canvass the opinions of other power companies before giving its ruling on the SP-TXU plan.